IPO-bound Unicommerce eyes sustainable growth with new strategies: CEO

Bengaluru: IPO-bound e-commerce enablement company Unicommerce will continue prioritizing profitability after its listing, according to chief executive Kapil Makhija. 

Unicommerce's growth strategy revolves around three pillars: domestic expansion, international expansion, and new product launches, Makhija said.

“Profitability is a key ethos, so we continue to be profitable and that as an ethos is not going away. We want to continue to drive sustainable growth, and we're very clear on that as an organisation,” Kapil Makhija, CEO of the company, told Mint in an interaction. 

Unicommerce plans to increase its penetration in India by attracting more brands and boosting revenue from existing ones. “As for international expansion, we are already present in six-plus countries outside of India, largely focused on Southeast Asia and the Middle East,” he said.

The company will continue to launch new products to ensure that brands have a single vendor solution to take care of post-purchase experience, Makhija said. 

Founded in 2012, Unicommerce, acquired by Snapdeal, is an integrated e-commerce enablement SaaS platform that offers solutions to fulfil the needs of sellers and D2C brands to streamline business operations. Some of its clients include Lenskart, Fabindia and Zivame.

The company received the Securities and Exchange Board of India (Sebi) approval for its initial public offering (IPO) plan on Monday,  according to the markets regulator filing. 

It plans to offer up to 29.8 million equity shares with a face value of ₹1 per share. Promoters of Unicommerce, such as AceVector Ltd, formerly known as Snapdeal, have planned to offer 11.4 million shares for the offer-for-sale. 

B2 Capital Partners and SB Investment Holdings (UK) Ltd have planned to dilute about 2.2 million equity shares and about 16 million equity shares, respectively.

Domestic expansion 

The domestic expansion plan is mainly about getting more brands on the platform. “The idea is to get more brands on the platform as well as drive more revenue from the existing brands as our revenue is transactional,” said Makhija.

The company is banking on integrations to execute that. Recently, the company launched quick commerce integration, which lets brands fast-track quick commerce orders for their products. 

“In the last 12 months, quick commerce has become a very salient model and that's why we extended our offering to also provide quick commerce integrations. Particularly for health and nutrition categories as well as food and personal care categories, we are seeing a high amount of salience of these channels,” said Makhija. 

The company has launched two new products – UniShip (a tech-tool to simplify order tracking, returns and exchanges) and UniReco (a tool that helps reconcile products ordered and returned, automates fee computation for different marketplaces, etc.) in the last one year. 

While ‘multi-channel order management’ and ‘warehouse management systems’ are the key revenue drivers, the company has seen rapid adoption of its newer offering ‘omnichannel retail management solution’, according to Makhija. 

“We are working with 750-plus enterprises, so we keep engaging with them on a regular basis to understand their new needs to cater to. There are parallel experiments that are in the works, but our immediate focus will be to stabilize some of the new launches,” he said. 

The company is also pushing to capture the market in Tier-2 and Tier-3 towns. “It's not that we can let go of metros because a lot of brands still continue to get created in metros as well. But at the same time, I think, let's say five years ago, we may not be making a very concerted effort in reaching out to Tier 2, Tier 3 cities. Now we've started to do that.”

International expansion 

While the immediate focus for the company is to go deeper into existing geographies like Southeast Asia and West Asia, there is a parallel deliberation happening on what will be the next set of geographies, according to Makhija. 

Talking about the company’s solution, he said, “It could be relevant to an African geography, it could be relevant to a Latin geography, it could be relevant to a European geography as well.”

For the quarter ended September 2023, The company had 46 international clients, contributing to over 3.23% of the company’s revenue. This number was 2.74% in the fiscal 2023. 

Sustainable growth 

"The whole wave of B2C dropship movement is very recent, only three to four years old. That's where we have seen our revenue growth also coming in,” Makhija said.

Automation has also been a key lever in maintaining its profitability, he said. “We require a lot of automation internally to make sure that we are able to keep our costs in check. We have a lot of optimizations that run to ensure that we are able to not only keep our fixed costs, overheads as well as the direct costs which go in serving these businesses in check.” 

About the IPO, Makhija said “From a readiness perspective, as an organization, we felt that we are ready for it…It will allow not only existing but also prospective shareholders to participate and enable a public market for equity shares.”

Unicommerce’s revenue from operations rose 52.5% to ₹90 crore in FY23 as compared to ₹59 crore in FY22. Its profit increased from ₹5.98 crore to ₹6.64 crore during the same period.

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